Transforming the Postal Bank into a Cooperative Bank – Officials

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KAMPAL- The conversion of Post Bank, the only remaining indigenous bank in Uganda, into an agricultural cooperative bank will help farmers access low-interest loans and stimulate growth in the agricultural sector.

A joint statement written by Rtd Lt Most Magufuli Babyonera, the Procurement and Seeds Officer of Operation Wealth Creation (OWC), and Hamidu Byamugisha Kigongo, a former aspiring MP in Kajara, Rukungiri District, claims that this decision will stimulate the development model of the parish.

“Over 68% of Ugandans who are engaged in agriculture have been dehumanized by commercial banks, which charge interest of up to 23% per annum,” reads a statement addressed to OPM chief Gen. Salim Saleh.

He says converting Post Bank into an agricultural and cooperative bank will not be too complicated as it already has the necessary structures in place to competently perform the designated roles.

“We observed that there is a missing link between agriculture, access to affordable credit and the market. The absence of strong financing for the agricultural sector would mean that Ugandans will be chained to poverty for many years,” the letter continues.

The authors argue that Uganda has not yet emerged from the impasse created when the World Bank and the International Monetary Fund (IMF) recommended the closure of the Uganda Commercial Bank and the Cooperative Bank, whose role was largely in favor of the farming community in Uganda.

“While the government has implemented a number of reforms aimed at improving production, competitiveness and household incomes, there is a need to prioritize financing for agriculture that will boost agribusiness and turn around the economy,” the statement continued.

In a separate interview, Babyomera said the government should consolidate social development funding and create a funding vehicle, instead of dispersing resources.

“There are several scattered government funds channeled through initiatives such as NAADS, Emyooga, Women’s Development Fund, Luweero and Northern Uganda Development Funds, and the Parish Development Model.

The fact is that people don’t need so many development initiatives but an agricultural and cooperative bank that can finance their ideas by giving them interest-free loans,” he said.

He said it is evident that the government has failed to regulate financial service providers, which has hurt farmers’ productivity.

As of December 2020, PostBank Uganda had total assets worth 745 billion shillings (approximately $193.3 million), with equity worth 117.1 billion shillings (approximately $30.4 million). of dollars).

At that time, customer deposits totaled 507.2 billion shillings (approximately $131.6 million) and its loan portfolio stood at 454.9 billion shillings (approximately $118 million).

PostBank Uganda has been in existence since 1926 when it was established as a post office department.

In February 1998, PostBank Uganda Limited was incorporated under the Communications Act 1997 to take over the operations of the former Postal Savings Service.

It was then incorporated under the Companies Act in February 1998 as a limited liability company.

The operations of the bank are supervised by the Bank of Uganda under the Financial Institutions Act. In December 2021, it was classified as a Tier II institution (non-banking credit institution) by the Bank of Uganda (BOU) before its banking license was upgraded to Tier I.

It currently has 60 branches nationwide.

Virginia S. Braud